Consolidation Loan 

Combining several debts into one loan usually to reduce the annual percentage rate or the dollar amount of payments made each month, extending them over a longer period of time.

Consumer Loan Act (CLA) 

A law that authorizes higher interest rates so as to ensure credit availability to borrowers with higher than average credit risks that might otherwise be unable to obtain loans.

Consumer Protection Act (CPA) 

Is a law that prohibits unfair and deceptive acts or practices in trade or commerce.

Conventional loan 

A mortgage not insured by the FHA or guaranteed by the VA.

Conventional Loan 

A private sector loan, one that is not guaranteed or insured by the U.S. government. Federally backed loans include Federal Housing Administration (FHA), Veterans Administration (VA) and U.S. Department of Agriculture Rural Development loans (formerly Farmers Home Administration or "FmHA" loans).

CoSigner

A person who guarantees the payment of a loan for another person.

Counter Offer

An offer made in return by the person who rejects the previous offer.

Credit Authorization 

Verification of the validity of a credit card and the balance allowable on the purchaser's credit line.

Credit Bureau 

An organization that gathers information about a consumer's creditworthiness and to which a financial institution may apply for such information about a prospective borrower.

Credit Card 

An instrument or device, whether known as a credit card, credit plate or any other name; issued (with or without a fee) by an issuer for the use of the cardholder in obtaining money, goods, services, or anything of value; and that creates a liability by the card user in favor of the issuing institution.

Credit Disability Insurance 

Insurance that provides loan payments to be made on behalf of a borrower who is temporarily disabled and loan balances to be paid off if the member is permanently disabled.

Credit History 

A credit history is a record of credit use. It is comprised of a list of individual consumer debts and an indication as to whether or not these debts were paid back in a timely fashion or "as agreed." Credit institutions have developed a complex recording system of documenting your credit history. This is called a credit report.

Credit Limit 

Maximum amount of credit available to a consumer on a specific account at any one time.

Credit Rating 

The estimate of the amount of credit that can be extended to a borrower without undue risk based on the borrower's past credit experience.

Credit Report 

A record that lists all past and present debts and the timeliness of their repayment; it documents an individual's credit history. Can also contain public information such as bankruptcies, court judgments, and tax liens.

Credit Report 

A report to the lender on the credit standing of the borrower, used to help determine creditworthiness.

Credit Score 

A computer generated number that summarizes an individual's credit profile and predicts the likelihood that a borrower will repay future obligations.

Credit Scoring System 

A quantitative, statistical evaluation method used to establish a credit applicant's creditworthiness.

Credit Union 

A cooperative financial institution that provides consumer financial services for members of a specified group as de fined by its charter (CUs may be federally or state chartered).

Credit 

A bookkeeping entry that increases the balance in a member's account (deposits and dividends are examples of credit entries) (2) an arrangement to receive cash, goods or services now and pay for them in the future.

Creditworthiness 

An evaluation of a consumer's ability and willingness to repay a debt.

CUSO

(Credit Union Service Organization) an organization established primarily to serve the needs of its credit union owner and whose business relates to the daily operations of the credit union it serves.

Debit Card 

A card used for banking transactions at automatic teller machines or point of sale terminals.

Debit 

A bookkeeping entry that decreases the balance of a member's account. Checks posted to an account, and entries to an account for the payment of service charges are examples of debit entries.

Debt 

A sum of money owed from one person or institution to another person or institution.

Debt To Income Ratio 

The relationship between the consumer's monthly debt payments and monthly income, expressed as a ratio. Lenders will often set a maximum debt to income ratio and usually do not make loans to consumers whose ratios exceed the lender's standard. With the FHA, the monthly mortgage payment should be no more than 29% of monthly gross income (before taxes) and the mortgage payment combined with non housing debts should not exceed 41% of income.

Declining Balance 

The decreasing amount owed on a debt as monthly payments are made.

Deed of Trust or Mortgage 

A legal document in which the borrower conveys the title to a 3rd party (trustee) to hold as security for the lender. When the loan is paid in full the trustee re conveys the deed to the borrower. If the borrower defaults on the loan the trustee will sell the property and pay the lender the mortgage debt.

Deed of Trust 

A deed placed in trust by the borrower with a third party, as security for the lender.

Deed 

A formal, written agreement transferring title of a real estate property from one person to another.

Deed In Lieu

To avoid foreclosure ("in lieu" of foreclosure), a deed is given to the lender to fulfill the obligation to repay the debt; this process doesn't allow the borrower to remain in the house but helps avoid the costs, time, and effort associated with foreclosure.

Default Rate 

The interest rate the creditor will charge once the borrower defaults on the loan. This rate is always higher than the contract interest rate.

Default 

Failure to perform a legal obligation; a default includes failure to pay on a financial obligation, but may also be a failure to perform some action or service that is non monetary.

Delinquency 

Failure of a borrower to make timely mortgage payments under a loan agreement.

Demand Deposit 

Checking account funds which are subject to withdrawal at anytime on demand by a member' s written demand (usually a check).

Deposit 

The amount of money you put down on a house to hold it.

Depreciation 

A decline in the value of a house due to changing market conditions, decline of a neighborhood or lack of upkeep on a home.

Direct Deposit Service 

A process that credits a member' s bank account directly for a payment due the member without the use of a check; e.g., a monthly Social Security payment.

Disclosure Statement 

An itemized list of all charges giving total cost of credit.

Discount Point 

Normally paid at closing and generally calculated to be equivalent to 1% of the total loan amount, discount points are paid to reduce the interest rate on a loan.

Disposable Income 

Take home pay or net pay.

Dormant Account 

A member account that has had no deposit or withdrawal activity for a certain period of time.

Down Payment 

Money paid to make up the difference between the purchase price and the mortgage amount. The amount of down payment required can vary from as little as 3% of the purchase price up to as much as 20% of the purchase price on conventional loans.

Draft 

A signed, written order, which is addressed by the maker to the drawee, to pay a sum of money to a third person, the payee.

Earnest Money Deposit 

Money put down by a potential buyer to show that he or she is serious about purchasing the home; it becomes part of the down payment if the offer is accepted, is returned if the offer is rejected, or is forfeited if the buyer pulls out of the deal.

Endorsement 

The payee's signature on back of the check which shows that the payee has received payment for the amount of the check, and is responsible for recourse if necessary.

Energy Efficient Mortgage (EEM) 

FHA program that helps homebuyers save money on utility bills by enabling them to finance the cost of adding energy efficiency features to a new or existing home as part of the home purchase.

Equal Credit Opportunity Act (ECOA) 

Prohibits discrimination in lending. ECOA prohibits any creditor from discriminating against an application with respect to any aspect of a credit transition based on sex, race, color, religion, national origin, disability or parental status.

Equity Stripping 

The lender makes a loan based upon the equity in your home, whether or not you can make the payments. If you cannot make payments, you could lose your home through foreclosure.

Equity 

The difference between the market value of a property and the homeowner's outstanding mortgage balance plus all other liens on the property. If you owe $100,000 on your house but it is worth $130,000, you have $30,000 of equity.

Equity 

In real estate, the difference between fair market value and current indebtedness; also referred to as the owners interest.

Escrow Account 

The segregated trust account in which funds are held by the lender for payment of taxes, insurance, mortgage insurance, lease payments, etc.

Escrow Agent 

The person or organization having a fiduciary responsibility to both the buyer and seller (or lender and borrower) to see that the terms of the purchase/sale (or loan) are carried out. Also called Escrow Company.

Escrow Closing (settlement) 

The occasion where sale of a home is finalized, the buyer pays the mortgage, and closing costs are paid.

Escrow Company 

An organization established to act as an escrow agent.

Escrow 

The holding of money or documents by a neutral third party prior to closing. It can also be an account held by the lender (or servicer) into which a homeowner pays money for taxes and insurance over the life of the loan. An escrow account provides the funds needed for such expenses as property taxes, homeowners insurance, mortgage insurance, etc.

Executor 

An individual or a bank named in a will whose function is to distribute the funds and property in an estate to the rightful heirs.

Fair Credit Reporting Act (FCRA) 

Stipulates the requirements of users of credit reports and disclosure to consumer.

Fair Housing Act 

A law that prohibits discrimination in all facets of the home buying process on the basis of race, color, national origin, religion, sex, familial status, or disability.

Fair Market Value 

The hypothetical price that a willing buyer and seller will agree upon when they are acting freely, carefully, and with complete knowledge of the situation.

Fannie Mae 

Federal National Mortgage Association (FNMA); a federally chartered enterprise owned by private stockholders that purchases residential mortgages and converts them into securities for sale to investors; by purchasing mortgages, Fannie Mae supplies funds that lenders may loan to potential homebuyers.

Federal Credit Union Act 

A federal law enacted in June 1934 that allowed federal credit unions and established methods for their chartering, supervision and examination.

Federal Housing Administration (FHA) 

A federal government agency that assists homebuyers by providing mortgage insurance to lenders to cover most losses that may occur when a borrower defaults; this encourages lenders to make loans to borrowers who might not qualify for conventional mortgages. The FHA does not lend money; it only insures the loan.

Federal Reserve System 

The central banking system in the United States that issues money and performs services on behalf of financial institutions and the federal government.

Fee 

Any charge assessed on or added to a loan.

FHA loan 

A loan insured by the Federal Housing Administration, open to all qualified home purchasers. While there are limits to the size of FHA loans, they are generous enough to handle moderately priced homes almost anywhere in the country.

FICO Score 

Is your credit rating. Most lenders base approval on them. You have three FICO scores, one for each credit bureau; Experian, TransUnion and EQUIFAX.

Fiduciary 

One who holds property in trust under the terms of a trust agreement.

Finance Charge 

The amount of money the loan will cost expressed as a dollar amount. The finance charge includes the interest together with certain other loan charges or fees specified by the Truth in Lending Act.

Fixed Rate Mortgage

A mortgage with payments that remain the same throughout the life of the loan because the interest rate and other terms are fixed and do not change.

Float 

The amount of money, represented by checks deposited to an account, that the credit union cannot use immediately because of the time it takes to process checks through the banking system.

Flood Insurance 

Insurance that protects homeowners against losses from a flood; if a home is located in a flood plain, the lender will require flood insurance before approving a loan.

Forbearance

Mortgage payments may be delayed or reduced for a short period, with the understanding that another option will be used at the close of that time to bring your account to a current status. Your lender, if in agreement, will then temporarily cease legal actions. Lenders may agree to combine Forbearance with Reinstatement or a Repayment Plan if you can provide the needed funds to bring your account current by a specific date. This plan works for people who have just experienced a sudden living expense increase or income loss.

Forgery 

The making or alteration of a document or instrument with the intent to defraud.

Freddie Mac 

Federal Home Loan Mortgage Corporation (FHLM); a federally chartered corporation that purchases residential mortgages, securitizes them, and sells them to investors; this provides lenders With funds for new homebuyers.

Gift Letter 

A letter that a family member writes verifying that he/she has given you a certain amount of money as a gift and that you do not have to repay it. You can use this money towards a portion of your down payment through some mortgage products.

Ginnie Mae 

Government National Mortgage Association (GNMA); a government owned corporation overseen by the U.S. Department of Housing and Urban Development, Ginnie Mae pools FHA insured and VA guaranteed loans to back securities for private investment; as With Fannie Mae and Freddie Mac, the investment income provides funding that may then be lent to eligible borrowers by lenders.

Good Faith Estimate (GFE) 

An itemized list of the estimated closing costs. By law, lenders or brokers must provide this list within 3 business days of receipt of the application. The GFE is intended to assure that consumers have adequate information about closing costs early on to enable them to comparison shop. The Real Estate Settlement Procedures Act requires this disclosure.

Government Bonds 

Obligations of the U.S. Government, regarded as the highest grade securities issues.

Grace Period 

A period of time after a due date not subject to late charges or cancellation penalties.

Gross Monthly Income 

The income you earn in a month before taxes and other deductions. Under certain circumstances, it may also include rental income, self employed income, income from alimony, child support, public assistance payments, and retirement benefits.